Quizzes & Puzzles6 mins ago
Should I Be Worried In Light Of Carney's Worst Case Scenario?
Long-winded question alert - there are cleverer people on AB than me so I'm interested in opinions!
I'm in my mid(ish) 40s with a wife and two school age children. This is my second marriage and therefore we met each other after we had both had serious previous relationships (thankfully no previous children between us).
As such we bought fairly late in our lives.
I live in a reasonably affluent area where house prices are, frankly, absurd and therefore have a mortgage that takes up approx 30% of my net take home. Doesn't seem a lot, but once you add everything else....the pennies still have to be watched.
I won't be so crass as to tell you my earnings, but suffice to say it is in six figures.
If Carney's comments come to fruition and post-Brexit house prices could crash by 35% and the base rate increase to 10%, I would (a) be bordering on negative equity and (b) possibly be unable to afford my mortgage.
I doubt I am alone.
In this eventuality, would the Government allow a situation to arise where there could be mass mortgage defaults?
I earn a decent living, but I would not describe myself as rich.
I'm in my mid(ish) 40s with a wife and two school age children. This is my second marriage and therefore we met each other after we had both had serious previous relationships (thankfully no previous children between us).
As such we bought fairly late in our lives.
I live in a reasonably affluent area where house prices are, frankly, absurd and therefore have a mortgage that takes up approx 30% of my net take home. Doesn't seem a lot, but once you add everything else....the pennies still have to be watched.
I won't be so crass as to tell you my earnings, but suffice to say it is in six figures.
If Carney's comments come to fruition and post-Brexit house prices could crash by 35% and the base rate increase to 10%, I would (a) be bordering on negative equity and (b) possibly be unable to afford my mortgage.
I doubt I am alone.
In this eventuality, would the Government allow a situation to arise where there could be mass mortgage defaults?
I earn a decent living, but I would not describe myself as rich.
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It's likely that the "up to 35%" is an extreme case even in this scenario, rather than the expected effect -- that is, something closer to a 10% drop might be more probable in the no-deal scenario Carney is referring to.
I expect that most of this will be avoided because, in the end, both sides will recognise that a bad deal is better than no deal: a "bad deal" can be far more easily improved, given enough time. So hopefully you won't need to worry about this. The point is to warn the government and the EU to avoid this sort of thing, rather than to expect it to happen.
I expect that most of this will be avoided because, in the end, both sides will recognise that a bad deal is better than no deal: a "bad deal" can be far more easily improved, given enough time. So hopefully you won't need to worry about this. The point is to warn the government and the EU to avoid this sort of thing, rather than to expect it to happen.
I think the chances of a no deal are very small.
Those who merely dismiss these predictions tho are kidding themselves. Certain - and I mean ‘certain’ not all by any means - among those favouring Brexit appear to have let their obsession with leaving the EU distort their priorities seriously. I’m talking about those who secretly or otherwise would like us to crash out with no deal. And even the Tory MEPs the other day who shamefully refused to censure Hungary in the EU parliament.
Those who merely dismiss these predictions tho are kidding themselves. Certain - and I mean ‘certain’ not all by any means - among those favouring Brexit appear to have let their obsession with leaving the EU distort their priorities seriously. I’m talking about those who secretly or otherwise would like us to crash out with no deal. And even the Tory MEPs the other day who shamefully refused to censure Hungary in the EU parliament.
er what was the question ?
can you future proof your wealth/income ? no I dont think so
can you avoid it completely ? - well sell up and go - but go where ?
You have projected various er variables and found that they stretch and then at full stretch predict failure
so are the numbers - accurate? we have to wait and see
well - house prices have fallen once in the last 200 y
and we have had high interest rates 1980 - my highest mortgage rate was 12% p a I think.
and there was a time when Nationwide was the largest house owner in Fngland because they chucked out everyone in three months arrears - and seized assets and then found they couldnt liquidate them.
would the govt act to prevent a recurrence ?
no I dont think so
can you future proof your wealth/income ? no I dont think so
can you avoid it completely ? - well sell up and go - but go where ?
You have projected various er variables and found that they stretch and then at full stretch predict failure
so are the numbers - accurate? we have to wait and see
well - house prices have fallen once in the last 200 y
and we have had high interest rates 1980 - my highest mortgage rate was 12% p a I think.
and there was a time when Nationwide was the largest house owner in Fngland because they chucked out everyone in three months arrears - and seized assets and then found they couldnt liquidate them.
would the govt act to prevent a recurrence ?
no I dont think so
The point I was clumsily trying to make was that this could have far reaching effects for everybody including those that are considered to be on decent(ish) money.
I'm concerned.
My wife, who was a leaver, is now also concerned (I was, am still am, a remainer) and is reavultating her choice.
I sincerely hope the scare stories are just scare stories.
I'm concerned.
My wife, who was a leaver, is now also concerned (I was, am still am, a remainer) and is reavultating her choice.
I sincerely hope the scare stories are just scare stories.
No long term negative consequences. All change brings shorter term disruption. No one can predict the future with certainly but I'd suggest dismissing fantastic sounding pessimism as coming from those with an axe to grind. I see no justification that buyers would drop out of the market in any great numbers. I think some just make up nightmare scenarios in the hope of creating a demand for some insane stopping of regaining control of our own nation again. As for your own situation, everything in life has risks; you decide whether prices will rise or fall. Your prediction is as good, if not better, than Carney's.
"...post-Brexit house prices could crash by 35%"
There is absolutely no reason why this should be so. There has been a modest correction in recent months and these happen from time to time. But the fundamental problem with the housing market in the UK is too much demand (i.e. too many people) and too little supply. That is why house prices are and will remain, as you correctly describe it, "ridiculous". It's a sellers' market and will remain so for the foreseeable (and the unforeseeable) future. Brexit will have little effect on that.
"...and the base rate increase to 10%,"
Yesterday the BoE MPC voted unanimously to keep the Base Rate at 0.75%. It has risen just 0.25% in ten years. To accompany that announcement The Governor said then that any rises will be gradual and over a long term. Suddenly that same Mr Carney suggests they will rise about forty times more in the next three years than they have in the previous ten.
There is no rationale behind either of his doom laden prophesies. His interest rate scenario depends on a crash (or more like a catastrophic collapse) in the value of sterling. This pre-supposes a prolonged period of instability following Brexit where the UK's balance of trade worsens considerably. All the doomsayers commenting on Brexit seem not to understand that life will go on. Trade between the EU and the UK is mutually beneficial (in fact it is heavily weighted towards the EU to the tune of some £80bn pa). In the event of "no deal" (or even with one) the Euromaniacs may make a nuisance of themselves for a short period just to say "told you so" (and to discourage other nations not to be so foolish as to try to leave The Empire). But common sense and pragmatism will eventually kick in. You need have no fears that Mr Carney's predictions will be fulfilled.
There is absolutely no reason why this should be so. There has been a modest correction in recent months and these happen from time to time. But the fundamental problem with the housing market in the UK is too much demand (i.e. too many people) and too little supply. That is why house prices are and will remain, as you correctly describe it, "ridiculous". It's a sellers' market and will remain so for the foreseeable (and the unforeseeable) future. Brexit will have little effect on that.
"...and the base rate increase to 10%,"
Yesterday the BoE MPC voted unanimously to keep the Base Rate at 0.75%. It has risen just 0.25% in ten years. To accompany that announcement The Governor said then that any rises will be gradual and over a long term. Suddenly that same Mr Carney suggests they will rise about forty times more in the next three years than they have in the previous ten.
There is no rationale behind either of his doom laden prophesies. His interest rate scenario depends on a crash (or more like a catastrophic collapse) in the value of sterling. This pre-supposes a prolonged period of instability following Brexit where the UK's balance of trade worsens considerably. All the doomsayers commenting on Brexit seem not to understand that life will go on. Trade between the EU and the UK is mutually beneficial (in fact it is heavily weighted towards the EU to the tune of some £80bn pa). In the event of "no deal" (or even with one) the Euromaniacs may make a nuisance of themselves for a short period just to say "told you so" (and to discourage other nations not to be so foolish as to try to leave The Empire). But common sense and pragmatism will eventually kick in. You need have no fears that Mr Carney's predictions will be fulfilled.
it's nonsense to talk about this being project fear: what home sellers may fear, home buyers may welcome. It just depends where you stand. I assume Carney's comments were "worst-case" (ie best-case for some). A fall in prices seems quite possible - but it's unlikely to be anything like that high. But of course Carney and I could both be wrong.
Do you intend to move in the next five years or so deskdiary?
Because the price of a house has chuff all to do with anything if not.
For mortgage owners it’s the interest rate that’s important. Even if you are in negative equity it doesn’t matter if you don’t intend to move because perhaps by the time you do, house prices might have gone up again should they fall.
Because the price of a house has chuff all to do with anything if not.
For mortgage owners it’s the interest rate that’s important. Even if you are in negative equity it doesn’t matter if you don’t intend to move because perhaps by the time you do, house prices might have gone up again should they fall.
Cassa - no, this our 'forever' house. It would devastate us if with we could no longer afford it.
My mother-in-law and father-law who are both retired and are sitting.on loads of money are always moaning about the interest rate and cannot comprehend that if it goes up it will possibly cause us problems but if it doesn't they still retain their capital.
They just don't get it.
My mother-in-law and father-law who are both retired and are sitting.on loads of money are always moaning about the interest rate and cannot comprehend that if it goes up it will possibly cause us problems but if it doesn't they still retain their capital.
They just don't get it.
Even if this did happen the only people affected in the short trem by a house drop are those trying to make money on a second property.
If you are living in your own home then look at the cost of rent rather than your property value which is a pointless value unless you downsize. As for 10 % interest rate that wll only happen in this country in next 5 years if Comrsde Corbym the lover of Venezurlan economy gets in.
If you are living in your own home then look at the cost of rent rather than your property value which is a pointless value unless you downsize. As for 10 % interest rate that wll only happen in this country in next 5 years if Comrsde Corbym the lover of Venezurlan economy gets in.
They get it just fine. They are robbed of a decent return on loaning their money and exoected to be happy about it, whilst others don't get that they are getting loans near free and worried that their lack of prudence may cause them issues if things ever get back to normal levels, because they're entitled to take risks and get away with it. Their capital is losing value every moment but some don't see that as anything important as long as they have bought something that rises in value using someone else's borrowed money.
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